In re: The Estate of Janet Gail Levine March, Absentee

• Court: Court of Appeals of Tennessee
• Decided: March 17, 1999
• Docket: 01A01-9708-PB-00437
• Status: Published

Opinion

IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE FILED March 17, 1999

IN RE ESTATE OF JANET GAIL ) Cecil Crowson, Jr. LEVINE MARCH, Absentee, ) Appellate Court Clerk ) Jeffrey Mobley, in his capacity as ) Conservator and Receiver for ) Janet Gail Levine March, ) Appeal No. ) 01-A-01-9708-PB-00437 Plaintiff/Appellee, ) ) Davidson Probate VS. ) No. 96P-1702 ) LAWRENCE E. LEVINE, ) CAROLYN R. LEVINE, for themselves ) and in their capacity as next friends of ) their daughter Janet Gail Levine March, ) Absentee, and their grandchildren, ) Samson Leo March and Tzipora ) Josette March (Children of Absentee), ) ) Defendants/Appellants, )

APPEALED FROM THE PROBATE COURT OF DAVIDSON COUNTY AT NASHVILLE, TENNESSEE

THE HONORABLE FRANK C. CLEMENT, JUDGE

MARK H. LEVINE 350 South Grand Avenue, Ste. 3600 Los Angeles, CA 90071-3442

JON E. JONES 345 S. Jefferson Avenue, 4th Floor Cookeville, TN 38503-0699 Attorneys for Appellant

JOEL M. LEEMAN 3rd Floor, 230 Fourth Avenue North Nashville, TN 37219-8888 Attorney for Appellee

REVERSED AND REMANDED

BEN H. CANTRELL, PRESIDING JUDGE, M.S.

CONCUR: KOCH, J. TODD, J. OPINION This case involves the assets of an absentee’s estate under Tenn. Code

Ann. § 30-3-201, et seq. After appointing a conservator for the estate, the Probate

Court of Davidson County approved the sale of the absentee’s major asset, and the

distribution of part of the proceeds to the absentee’s husband, who is a suspect in her

disappearance. The absentee’s parents, appearing on their own behalf and as next

friend of the absentee, attack the lower court’s order on both procedural and

substantive grounds. The conservator and the absentee’s husband challenge the

parents standing to appeal the lower court’s order. We find that the appellants had

standing to object to the settlement and that the distribution to the husband is not

justified by the proof. Accordingly, we reverse the lower court’s order and remand the

cause for further proceedings.

I.

Janet Gail Levine March disappeared on August 15, 1996, leaving

behind a husband and two minor children. The husband, a Nashville lawyer, soon

became the subject of an intense investigation into his wife’s disappearance.

Although a body has not been found, the investigation continues, and Mr. March

continues to invoke the Fifth Amendment when questioned about his knowledge of

his wife’s whereabouts.

In addition to small checking and savings accounts and other small

assets, Ms. March owned two primary assets in her sole name: an upscale home on

Blackberry Road in Nashville and a 1996 Volvo. She also owned a 1990 Jeep in joint

ownership with her husband.

Ms. March’s parents, Lawrence and Carolyn Levine, had financed the

construction of the home on Blackberry Road through gifts and a low-interest loan.

At the time of Ms. March’s disappearance, the Levines held a note, signed by both Mr.

-2- and Ms. March secured by a deed of trust on the house. Mr. March also signed the

deed of trust.

On October 30, 1996, Mr. March filed a petition in the Probate Court of

Davidson County seeking a summary transfer of the checking and savings accounts

to him.1 Although Tenn. Code Ann. § 30-3-203 authorized the court to make the

transfer without notice or a hearing (because the two accounts contained less than

$5,000), the court set a hearing and notified Ms. March’s next of kin.

On the date of the hearing, Mr. and Ms. Levine filed an intervening

petition as parents and next friends of Janet March, and as grandparents of the two

children. They opposed the transfer of any property to Mr. March.2 On the same

date, Mr. March amended his petition asking to be appointed a receiver for all of Ms.

March’s property. After the hearing, the court noted the hostility between the parties

and appointed an independent conservator pursuant to Chapter 3, Title 30 of the

Tennessee Code. The order gave the conservator power over all of Ms. March’s

assets, including her real estate.

By this time, Mr. March had relocated to Chicago with the children. The

house on Blackberry Road was empty; the utilities had been turned off; the real estate

taxes were in arrears, and the mortgage was in default. Mr. and Ms. Levine started

foreclosure proceedings, but the conservator secured an injunction preventing the

sale until February 28, 1997. Although Mr. March had previously non-suited his

claims in order to avoid discovery, he reasserted an interest in all of Ms. March’s

property in January of 1997.

1 The petition also s ought a tra nsfer to Mr. Ma rch of the custod ial rights to two accounts held by Ms. M arch for her childre n unde r the Te nness ee Un iform T ransfe rs to Mino rs Act.

2 The ir opposition was based, in part, on Tenn. Code Ann. § 31-1-106, which prevents any person from taking the property of a decedent, “by will, deed or otherwise,” when such person has killed the decedent (unless the killing was accidental or in self-defense).

-3- The conservator sought to be appointed receiver for Ms. March’s

property and asked for further instructions from the court. The motion to be appointed

receiver was unopposed, so the court granted the motion on February 4, 1997. In the

same order, the court ordered the conservator/receiver to list the house for sale.

On February 27, 1997 the conservator petitioned the court to approve

a contract of sale for the house. The court set a hearing on the motion for March 19,

1997. In a flurry of activity, beginning on March 6, 1997, Mr. March recorded a lien

lis pendens asserting a marital interest in the house on Blackberry Road, recorded

four deeds of trust on the property securing members of his family (with himself as

grantor), and sued the conservator and the trustee in the Levines’ deed of trust for

damages.

After the hearing on March 19, the court struck the encumbrances filed

by Mr. March, approved the sale of the property, and ordered that all lien claims be

transferred to the proceeds of the sale. Mr. March filed a notice of appeal from the

“final” judgment entered on April 1. The Levines, with the court’s approval, renewed

their efforts to depose Mr. March. The deposition was scheduled for May 21, 1997.

The conservator and Mr. March began negotiating a settlement. On May

20, they notified the Levines that they had reached an agreement and would present

it to the court for approval the next day. The agreement provided that Mr. March

would receive the Volvo and the Jeep and a $60,000 cash payment from the proceeds

of the sale. In return Mr. March promised to dismiss his appeal and relinquish all

claims he had to the proceeds of the sale of the house. In addition Mr. March agreed

to waive any claim for homestead and a year’s support, and he agreed that in the

event he became entitled to any portion of Ms. March’s estate, as an elective share

or as a division of marital property in a divorce, the amount due him would be reduced

by $73,250.00 (the sum of the $60,000 in cash and one-half of the value of the Volvo

and Jeep.)

-4- At the hearing on May 21, the Levines vigorously protested the approval

of the settlement and asked for a continuance in order to discover the basis for any

claims Mr. March had against the house.3 They pointed out that there was no

evidence before the court that would substantiate such a claim, and that the

conservator had adamantly denied Mr. March had any colorable claims, until the

settlement talk started. Without hearing any proof, the court approved the settlement.

II. Standing

The probate court held that Mr. and Ms. Levine’s interest in the

proceeding was confined to the amount of their claim under the deed of trust; and that

they did not have standing to object to the settlement between the conservator and

Mr. March. The conservator continues to press that argument on appeal.

We disagree. The Levines joined this fight as the next friend of their

daughter. It is not clear from their intervening petition whether they stood as next

friend to the children or simply as their grandparents, but it is clear that they asserted

defenses to Mr. March’s claim of an interest in Ms. March’s estate. Specifically, they

raised as a defense the provision in Tenn. Code Ann. § 31-1-106 that prohibits a

person who kills another from inheriting the deceased’s property or taking such

property “by will, deed, or otherwise.”

A “next friend” is, in a sense, a volunteer who asserts a claim on behalf

of a person under a legal disability. See Williams v. Gaither, 139 Tenn. 587, 202 S.W.

917, 918 (1918). A next friend is someone who is capable of protecting the interests

of the person under the legal disability, who will be liable for the costs, and against

whom the court can make and enforce its orders. See Raskin v. Warner, 70 Tenn.

302, 304-05 (1879). While a next friend is not a party to the action, see Queen v.

Jolley, 219 Tenn. 427, 431, 410 S.W.2d 416, 418 (1966), the role a next friend plays

3 In fact, the Levines had only begun the deposition of Mr. March that morning, and he had refused to answer any questions about the basis for his claims.

-5- resembles that of a guardian. See Williams v. Gaither, 139 Tenn. at 589, 202 S.W.

at 918; Cummings v. Patterson, 54 Tenn. App. 75, 94, 388 S.W.2d 157, 166 (1964).

A next friend may be replaced if the court appoints a personal

representative for the person under disability. The general rule is that a duly

appointed representative becomes the successor to the next friend with regard to any

claim the next friend has asserted on behalf of a person under a legal disability. See

Williams v. Gaither, 139 Tenn. at 590, 202 S.W. at 918 (Tenn. 1918). This transfer

of power includes the power to control the claim. Id.

But the transfer is not automatic. In Williams v. Gaither a husband had

been injured in an accident, and the injuries he sustained rendered him mentally

incompetent. His wife, as next friend, sued the defendant on her husband’s behalf.

The husband’s mother was later appointed guardian of the injured man and she sued

the defendant in a separate action for the same injuries. The guardian then filed a

petition in the cause brought by the next friend asking that the action be dismissed at

the cost of the next friend. The court analyzed the problem in this way:

The first suit having been properly brought, what right had the guardian by motion or petition therein to have it dismissed? If, and so long as, the guardian proceeds on the basis of the first suit being wrongfully brought or prosecuted by the next friend, she is to be deemed to be a stranger to that action, and as such she could not successfully so move to dismiss it. (Citation omitted).

The true conception seems to us to be that the regularly appointed guardian became the successor of the next friend in respect of the right to control the suit. Upon the due appointment of the guardian, the power to control the non compos and his affairs, including the suit, devolved upon her. The power formerly exercisable by the next friend was superseded by that belonging to the regularly appointed guardian. The greater power overlapped and, so to speak, absorbed the lesser at the guardian’s election. It is not to be tolerated that property rights of a non compos mentis should be controlled by a next friend after the appointment of a regular guardian, against the will of the latter. Neither is it to be recognized that the guardian may at will thus set at naught what the next friend has precedently done, under the law’s sanction, in bringing suit. If she wishes, as a part of her

-6- right of control, to dismiss such suit, she must do so by asserting her right of succession to the next friend. The proper course, therefore, was for the guardian to move to be substituted as plaintiff in the first suit; then, if she desired for any reason, she might have dismissed that suit and brought another, or assumed continued control of that action. But she would in either event do so by adopting the action, and taking the reins from the hands of the next friend, and not as one claiming as an antagonist, or rival plaintiff.

139 Tenn. at 590-91.

In Hunt v. Hunt, 412 S.W.2d 7 (Tenn. App. 1965), the husband, already

under a guardian, brought suit by next friend to have his marriage annulled. The trial

court held that the next friend had no standing to bring suit where a guardian had

already been appointed for the person under disability. This court reversed the lower

court because the regular guardian had refused to take a stand either for or against

the claim.

The Rules of Civil Procedure seem to have adopted the view that some

claims may be asserted by next friend even where a personal representative has been

appointed. Rule 17.03 of the Tennessee Rules of Civil Procedure provides:

Whenever an infant or incompetent person has a representative, such as a general guardian, conservator, or other like fiduciary, the representative may sue or defend on behalf of the infant or incompetent person. If an infant or incompetent person does not have a duly appointed representative, or if justice requires, he or she may sue by next friend. (Emphasis added.)

While we do not find any Tennessee cases on point, the weight of authority

interpreting Rule 17(c), Fed. R. Civ. Proc. (almost identical to Tenn. R. Civ. Proc.

17.03) is in favor of allowing suit by next friend in certain circumstances. In 3A J.

Moore & J. Lucas, Moore’s Federal Practice and Procedure, § 17.26 (2d. ed. 1985),

the authors state:

Under the second sentence of subdivision (c) an infant or incompetent person who does not have a duly appointed representative, may sue by his next friend or by a guardian ad litem. Even though the infant or incompetent has a general representative, if the representative is unable or refuses to act or his interests confict with the person

-7- represented, the infant or incompetent may sue in federal court by his next friend or by a guardian ad litem. Courts have always had the power to appoint special representatives under such circumstances, and this power should be considered retained by the federal court in Rule 17(c). The fact that the first sentence is permissive is an implicit recognition of that power; and, in any event, a guardian ad litem probably can be appointed in such cases under the third sentence of subdivision (c).

State courts have taken the same view when a personal representative

has a conflict of interest or “for other cause.” See In Re Becan, 26 A.D.2d 44, 270

N.Y.S.2d 923 (App. Div. 1966). We note that our rule allows suit by next friend when

the incompetent person does not have a personal representative or “if justice

requires.” The fact that the rule is in the alternative suggests that a next friend may

assert the interests of an absentee even though a personal representative has been

appointed.

Where the Levines originally opposed Mr. March’s claims as next friends

of the absentee, the appointment of a conservator did not automatically terminate their

standing to oppose the conservator/March settlement. In fact, their status as next

friend of the absentee has not been challenged in this record. Therefore, they had

standing to oppose the settlement.

III. The Settlement Approval

a. Due Process

Since we have found that Mr. and Ms. Levine had standing to object to

the settlement, we believe the emergency hearing on May 21, 1997 deprived them of

a meaningful opportunity to object to the terms of the settlement. They were in fact,

in the middle of a deposition with Mr. March, seeking to discover the basis for any

claim he had against his wife’s property. So far as this record shows, he never

answered any of the questions.

-8- Article I § 8 of our Constitution prohibits the taking of property except by

the “law of the land.” This phrase is synonymous with “due process of law” used in

the Fifth and Fourteenth Amendments of the United States Constitution. State v.

Hale, 840 S.W.2d 307 (Tenn. 1992). A fundamental requirement of due process is

notice and an opportunity to be heard, Phillips v. State Bd. of Regents, 863 S.W.2d

45 (Tenn. 1993), or, as our Supreme Court said in State ex rel. Anglin v. Mitchell, 596

S.W.2d 779 at 786 (Tenn. 1980), “the right to a fair trial in a fair tribunal.” The

purpose of notice under the due process clause is to apprise a party of, and permit

adequate preparation for, an impending hearing. Memphis Light, Gas and Water

Division v. Craft, 436 U.S. 1 (1978).

The hearing conducted on May 21, 1997 failed to satisfy the

requirements of due process. The Levines did not have an adequate opportunity to

rebut Mr. March’s claims.

b. A Failure of Proof

The settlement of a claim by or against an infant or incompetent person

must be based on proof showing that the settlement is in the minor or incompetent

person’s best interests. Thomas v. R. W. Harmon, Inc., 760 S.W.2d 212 (Tenn. App.

1988). In Thomas v. Harmon the court set aside a settlement of a minor’s personal

injury claim where the only proof offered was proof that the child’s parents wished to

enter into the settlement. The court said, “The minor’s rights were impaired by a

purported hearing, when in fact there was no evidence introduced upon which a court

could base an opinion requiring consideration of the best interests of the minor.” 760

S.W.2d at 217.

It is fair to point out that the court in Thomas v. Harmon did not appoint

a guardian ad litem to protect the minor’s interests, while the court here appointed a

conservator for the absentee’s estate. But it seems to us that the situation is exactly

the same regardless of who purports to represent the person under disability. In

-9- Thomas it was the parents; here it was the conservator, but the problem of proof (or

lack thereof) is the same. There is nothing in the record on which the court could

base a determination that it was in the best interests of the absentee to pay a

minimum of $73,000 from her estate to settle what appears to be doubtful claims.

It is not clear from this record what claims Mr. March might have against

the absentee estate. He asserts an interest in the equity in the house, and the

settlement provides that he would credit the amount he received to any claim he might

have in a subsequent divorce. But the facts simply do not show that he would receive

a substantial portion of the equity in the house as a part of a divorce proceeding.

While the equity in the house would be marital property, we cannot speculate on how

it would be divided in light of the other marital assets he received in the settlement and

the lack of proof of the contributions he made to the acquisition and construction of

the house.

At the hearing the conservator also expressed a fear that, absent the

settlement, the litigation expenses would continue to escalate as Mr. March pursued

an appeal of the March 19 order and tried to hold up the sale of the house.

We have no doubt that Mr. March has the ability to make trouble for the

estate, but we do not think he could have held up the sale. In its March 19 order, the

court had already ordered that the house be sold and that Mr. March’s claims and

those of his relatives be transferred to the proceeds of the sale. The appeal of that

order could not be made instantaneously, because it was not a final order under Rule

3(a), Tenn. R. App. Proc., and we think the probate court had the power to deal with

any frivolous claims or obstructionist tactics that threatened to deplete the absentee’s

estate. In short, the courts should not be held hostage by in terrorem tactics of one

of the litigants.

IV.

- 10 - Although not raised by the parties, there are two additional matters that

we feel compelled to address.

a. The Levines’ Conflict of Interest

We think the Levines have a potential conflict of interest as next friends

of the absentee. They are actually creditors of the estate by virtue of the mortgage

they held on the Blackberry Road property. They had started foreclosure proceedings

before the conservator obtained a preliminary injunction in January of 1997. W hile

we are satisfied to recognize that they have standing and that they were acting in a

good faith attempt to protect their absent daughter’s estate, they should not wear two

hats in this litigation.

Our jurisdiction is appellate only. Tenn. Code Ann. § 16-4-108. Since

the issue was not raised in the court below we cannot address it here, and with the

sale of the house now presumably complete we do not know if a conflict still exists.

We merely point out the potential conflict for consideration in subsequent

proceedings.

b. The Children’s Rights

The absentee’s children obviously have rights that deserve specific

protection. Their rights conflict with their father’s rights, and we have noted the

conflict between their grandparents and their mother’s estate. That leaves the

conservator as the only party in this litigation without an obvious conflict.

We do not wish to increase the expenses involved in settling this estate.

But if the probate court determines that the conservator cannot adequately represent

the children’s interests, the appointment of a guardian ad litem would be appropriate.

The judgment approving the conservator’s settlement with Mr. March is

reversed and the cause is remanded to the Probate Court of Davidson County for

- 11 - further proceedings in conformity with this opinion. Tax the costs on appeal to Mr.

March.

_________________________________ BEN H. CANTRELL, PRESIDING JUDGE, M.S.

CONCUR:

_______________________________ WILLIAM C. KOCH, JR., JUDGE

_______________________________ HENRY F. TODD, JUDGE